By a staff reporter, with AAP
As expected, the United States Federal Reserve said it will keep the central bank's $US85 billion ($A94 billion)-per-month bond-buying program in place as officials wrapped-up a closely watched two-day policy meeting.
In its statement, the central bank pointed to modest economic growth, higher mortgage rates and low inflation as issues it is closely tracking.
The Federal Open Market Committee (FOMC) said it would continue to buy $US85 billion in bonds per month to help tamp down longer term interest rates that have been helping support growth, and in particular the housing market recovery.
Pointing to economic growth "at a modest pace during the first half of the year," the FOMC said it would keep buying mortgage-backed securities at a pace of $US40 billion and longer-term securities at a pace of $US45 billion Treasury per month.
By reinvesting the mortgage-backed securities and rolling over maturing Treasury securities, the Fed said it "should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."
The Fed reiterated that it would keep its accommodative monetary policy "for a considerable time" after the asset-purchase program ends "and the economic recovery strengthens."
Previously Fed officials have described US economic growth as being “moderate”, but in its latest statement, the Fed described growth as “modest”, leading some analysts to question whether the Fed is taking a slightly darker view of the country's economic outlook.
The statement marks the first time in at least three years that the Fed has used the term “modest” in a formal policy statement to describe the US economy, the Wall Street Journal reported.
The central bank also said US inflation must move higher, closer to the central bank's two per cent target, before the Fed will be better-assured of the US economic recovery.
The Fed also continues to target an unemployment rate of 6.5 per cent as a threshold it wants to see in place before making any significant changes to its stimulus-spending program.
Talk of ending its bond-buying program in early May sent global markets tumbling, as did Fed chairman Ben Bernanke's move to outline a tentative timeline for tapering its stimulus spending in mid-June.
Since then, the Fed has sought to ease market fears, which have largely been successful as shares return to at or near all-time highs.
Fed keeps rates near zero
The Federal Reserve left unchanged near-zero interest rates.
It says rates will stay low amid 'modest' growth as long as the unemployment rate remains high.
The Fed lowered its jobless rate threshold for tightening monetary policy to at least 6.0 per cent, down from a prior figure of 6.5 per cent.
The jobless rate currently stands at 7.6 per cent.